Priority over common stock Usually has a fixed dividend rate Preferred Stock

# Priority over common stock usually has a fixed

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Priority over common stock Usually has a fixed dividend rate Preferred Stock Different voting rights 1 Analyze Liabilities Assets = Stockholders’ Equity + Cash +19,704,000 Preferred Stock +400,000 Additional Paid-in Capital +19,304,000 2 Record Cash Preferred Stock Additional Paid-in Capital 400,000 19,304,000 19,704,000

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Preferred Stock Redemption National Beverage redeemed 120,000 shares of its \$1 par value preferred stock for \$6,000,000 in 2016. 1 Analyze Liabilities Assets = Stockholders’ Equity + Cash −6,000,000 Preferred Stock −120,000 Additional Paid-in Capital −5,880,000 2 Record Preferred Stock Additional Paid-in Capital Cash 6,000,000 120,000 5,880,000
Amount of Preferred Dividend Dividend = Dividend Rate x Total Par Value of Preferred Stock Assume F Co. has 10,000 shares of \$50 par, 7% preferred stock. What is the annual amount of the preferred stock dividend?

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Preferred Stock Dividends Current Dividend Preference: The current preferred dividends must be paid before paying any dividends to common stock. Cumulative Dividend Preference: Any unpaid dividends from previous years ( dividends in arrears ) must be paid before common dividends are paid. If the preferred stock is noncumulative , any dividends not declared in previous years are lost permanently. 11-48
In addition to its common stock, National Beverage has \$1 par value cumulative preferred stock with a 7 percent dividend rate. Assume 100,000 of these shares are outstanding, one year of dividends are in arrears, and the board of directors just declared total dividends of \$400,000. How much will each class of stock receive? Preferred Stock Dividends 11-49

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Preferred Stock Dividends 11-50
In addition to its common stock, National Beverage has \$1 par value noncumulative preferred stock with a 7 percent dividend rate. Assume 100,000 of these shares are outstanding. Dividends were not paid last year. The board of directors just declared total dividends of \$400,000. How much will each class of stock receive? Preferred Stock Dividends 11-51

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Preferred Stock Dividends 11-52
Retained Earnings Total cumulative amount of reported net income less any net losses and dividends declared since the company started operating Baker Company incurred a loss of \$120,000 in 2017 that resulted in an Accumulated Deficit in Retained Earnings. Baker Company Comparative Balance Sheets (Partial) For Year Ended December 31 Stockholders’ Equity Common Stock Additional Paid-in Capital Retained Earnings (Deficit) Total Stockholders’ Equity 2018 \$ 100,000 750,000 50,000 900,000 2017 \$ 100,000 750,000 (70,000) 780,000

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Statement of Stockholders’ Equity
Learning Objective 11-5 Analyze the earnings per share (EPS), return on equity (ROE), and price/earnings (P/E) ratios.

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Net Income − Preferred Dividends Average Number of Common Shares Outstanding EPS = National Beverage’s income for 2016 was \$61.2 million, preferred dividends of \$0.20 million, and the average number of shares outstanding during the year was 46.6 million.
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